Finnish utility Fortum said on Thursday it will use waste heat from two new Microsoft data centres to warm homes and businesses in and around the capital Helsinki, while also cutting carbon emissions.

Microsoft simultaneously announced plans for the construction of the data centres, which will be powered by renewable energy, with their location chosen to allow for recycling of heat created from the cooling of computer servers.

District heating is widely used in Finland, pumping hot water through pre-insulated underground pipes, and has traditionally relied on fossil fuel sources.

Fortum operates a system of underground pipes stretching 900 kilometres and serving 250,000 users in the Helsinki metropolitan area. Once completed, the data centres will account for 40% of the system's heat supplies, the two firms said.

Fortum said its investment for the heat capture side from the data centres was estimated at 200 million euros ($221 million), with expectations this would cut some 400,000 tonnes of CO2 emissions annually.

Microsoft declined to say how much it would invest in the centres.

It estimated however that it would initially require some 400-500 gigawatt hours (GWh) of renewable energy per year, which it said was comparable in scope to other local industries such as a paper or pulp mill.

Microsoft plans to buy the electricity via one or several long-term power purchasing agreements (PPA), although no supplier has yet been selected, the company told Reuters.